Business / Companies
Zim government, Econet cross swords
29 Mar 2015 at 04:12hrs | Views
GOVERNMENT and Econet Wireless Zimbabwe have crossed swords over the former's stated intention to coax investors in the mobile telecommunications sector to share infrastructure, raising a protracted stand-off.
Information Communication Technology, Postal and Courier Services Deputy Minister Dr Win Mlambo told participants at the Digital Future Conference held on March 17, 2015 that Government intends to establish one company responsible for setting up telecoms infrastructure, which will be shared by players to prevent duplication.
"As Government, we want to see one independent company setting up infrastructure for the telecoms companies so that this whole dispute of who owns which infrastructure is solved.
"So, that is the route that Government has taken and we will sit down with the players to agree on certain terms," said Dr Mlambo.
Policymakers believe that infrastructure sharing will also help in shedding costs that are normally involved in setting up infrastructure which are usually dumped on subscribers.
Telecommunication industry experts estimate that it costs more than US$400 000 to set up a single base station.
There are also concerns that the multiple deployment of telecommunications equipment such as towers and fibre optic cables is now becoming an eyesore.
Telecel Zimbabwe has deployed fibre to link Harare and Gweru, while TelOne and PowerTel have already connected their fibre optic technology to an undersea cable via Mozambique and Botswana.
Econet's fibre optic cables link all major cities in the country.
However, while other operators subscribe to infrastructure sharing, Econet, which is the biggest player by both revenues and subscribers, is fiercely opposing the notion.
Econet has poured over US$1,2 billion into infrastructure development and owns 80 percent of mobile phone infrastructure in the country.
The company believes that there is no plan to share infrastructure, but to "compulsorily acquire" its base station sites and towers, including fibre optic network.
In e-mailed responses to questions from The Sunday Mail Business, Econet said it does not believe there is debate relating to infrastructure sharing, which it said entails parties who have invested in infrastructure in different geographic areas entering into arrangements to share their respective infrastructure on an equitable basis to avoid infrastructure duplication.
In fact, the company claims it has been doing precisely that.
"Our competitors may have base stations in areas that we may need to cover, but we may not have base stations in the same areas. Rather than investing in a base station tower side by side with that of our competitor, we would approach our competitor with a request to use their tower to install our base station on the basis that we would reciprocate likewise in another area where our competitors may need to also use our base station tower.
"At times we have agreed and at times we have not agreed depending on how strategic either party views the infrastructure on offer. This is the approach to infrastructure sharing that we have supported and have ourselves participated in.
"What we have opposed is the compulsory utilisation of our infrastructure by parties who themselves do not have infrastructure that we need to use. That is not infrastructure sharing. That is compulsory acquisition of infrastructure from one person who has chosen to invest in infrastructure for the benefit of another person who chose to invest in other things that are either not available to be shared, or that we do not need," said the telecommunications giant.
Interestingly, Econet argues that it cannot share infrastructure with companies that "chose to deploy their money in large fleets of cars, multi-storey buildings for their executive offices, and various other assets that we have no wish to share in".
Added Econet: "The tone that the current debate on infrastructure sharing has taken appears to be aimed at compelling us to make our infrastructure available for the use of others who chose other priorities.
"We all had an opportunity to develop our infrastructure. We would be betraying the Government of Zimbabwe, and thousands of pensioners and other shareholders who chose to forgo dividend in order for us to develop our infrastructure.
"Therefore the type of infrastructure sharing under debate is not feasible. It is a disguised, unconstitutional form of compulsory acquisition of our infrastructure."
Without giving names, the company claims that other players have been intruding into its base station sites without permission "in preparation for the illegal grab of our base stations".
The company said it is confident Government will "see through this ploy as they have already spoken out about the uneven playing field where only Econet has paid a licence fee of US$137,5 million and our competitors have not".
But Information Communication Technology, Postal and Courier Services Minister Mr Supa Mandiwanzira last week intimated that Econet is having a warped view of what Government intends to achieve.
"Infrastructure sharing is not a concept being invented by the Zimbabwe Government or by Supa Mandiwanzira. It's global best practice and we expect players like Econet to know better.
"But their reaction is not surprising. They are the biggest player in the market and therefore they want to protect and maintain their dominance.
"As it stands, Econet shares infrastructure with foreign networks that have their subscribers roaming in this country. Why should the same not be extended to Zimbabwean citizens who are not subscribers of Econet?
"If an MTN subscriber enjoys infrastructure sharing with Econet, why shouldn't a subscriber of NetOne or Telecel, for instance? As Government, we are not going back on the need to rationalise investments in the telecoms sector.
"We cannot have the duplication and triplication of infrastructure like base stations and fibre optic cable when all players can share and thereby reduce the cost to the consumer. Anyone opposing this direction, especially through the media, without engaging us in Government about their reservations, will find us very uncompromising," said Minister Mandiwanzira.
Telecel, whose agreement to operate has since been withdrawn, said it is willing to negotiate with other companies in order to share infrastructure.
NetOne spokesperson Mr Rutendo Chabururuka had not responded to questions e-mailed to him two weeks ago by the time of going to print.
But the company's managing director, Mr Reward Kangai, has in the past said the mobile phone companies were licensed at different times and have different structural specifications for their infrastructure, making infrastructure sharing difficult.
Econet has in the past been aggressive in defending its turf, a development that has ultimately set it on a collision course with different industry players.
Last year banks clashed with the mobile operator for refusing them access to its USSD platform.
To date, mobile platforms remain non-interoperable.
Interoperability describes the ability of a platform to use the part or system of another platform.
Various mobile value-added services have therefore remained the enclaves of respective mobile operators.
For example, subscribers on EcoCash, the mobile money service of Econet, cannot send money or vice-versa to One Wallet, which is NetOne platform of the same service and Telecash (controlled by Telecel).
Subscribers have, as a result, been inconvenienced.
In 2009, Government think-tank, the National Economic Consultative Forum (NECF), recommended the establishment of an infrastructure sharing framework for the telecommunications sector to boost connectivity and unlock industry opportunities.
At the time, telecommunication companies had realised the need to share both passive and active infrastructure.
As a result, network operators had signed MoUs to share towers in selected areas on a "swap basis".
There were 17 operational sites where towers are being shared between Econet and Telecel.
TelOne and Econet shared both passive and active infrastructure such as transmission capacity.
Powertel and Econet also shared bandwidth on routes such as Harare-Bulawayo, Harare-Mutare, Triangle- Chiredzi, Harare-Beitbridge, and Mutorashanga-Mt Darwin.
Similarly, NRZ was sharing transmission capacity with network operators.
But at the time, the NECF observed that NetOne, which had 204 sites in total, only shared two sites with Econet.
"There is unnecessary duplication of resources among the existing networks. For example, the three mobile networks have separate towers and equipment in Victoria Falls, Ruwa, Mvuma, and ZESA Training Centre (Harare).
"This duplication of network resources increases set-up costs thus hindering speedy network roll-out. Infrastructure sharing is being frustrated by limited co-operation and poor turnaround times among existing operators. Environmental aesthetics is also compromised as a result of the proliferation of towers.
"It is recommended that the regulator should provide a regulatory framework and criteria for infrastructure sharing, actively encouraging sharing or mandate access.
"Any regulatory decision should be made based on an analysis of the competitive impact of infrastructure and in line with good regulatory goals. The regulator should also be non-discriminatory and independent in its policy implementation," said NECF in the report.
Information Communication Technology, Postal and Courier Services Deputy Minister Dr Win Mlambo told participants at the Digital Future Conference held on March 17, 2015 that Government intends to establish one company responsible for setting up telecoms infrastructure, which will be shared by players to prevent duplication.
"As Government, we want to see one independent company setting up infrastructure for the telecoms companies so that this whole dispute of who owns which infrastructure is solved.
"So, that is the route that Government has taken and we will sit down with the players to agree on certain terms," said Dr Mlambo.
Policymakers believe that infrastructure sharing will also help in shedding costs that are normally involved in setting up infrastructure which are usually dumped on subscribers.
Telecommunication industry experts estimate that it costs more than US$400 000 to set up a single base station.
There are also concerns that the multiple deployment of telecommunications equipment such as towers and fibre optic cables is now becoming an eyesore.
Telecel Zimbabwe has deployed fibre to link Harare and Gweru, while TelOne and PowerTel have already connected their fibre optic technology to an undersea cable via Mozambique and Botswana.
Econet's fibre optic cables link all major cities in the country.
However, while other operators subscribe to infrastructure sharing, Econet, which is the biggest player by both revenues and subscribers, is fiercely opposing the notion.
Econet has poured over US$1,2 billion into infrastructure development and owns 80 percent of mobile phone infrastructure in the country.
The company believes that there is no plan to share infrastructure, but to "compulsorily acquire" its base station sites and towers, including fibre optic network.
In e-mailed responses to questions from The Sunday Mail Business, Econet said it does not believe there is debate relating to infrastructure sharing, which it said entails parties who have invested in infrastructure in different geographic areas entering into arrangements to share their respective infrastructure on an equitable basis to avoid infrastructure duplication.
In fact, the company claims it has been doing precisely that.
"Our competitors may have base stations in areas that we may need to cover, but we may not have base stations in the same areas. Rather than investing in a base station tower side by side with that of our competitor, we would approach our competitor with a request to use their tower to install our base station on the basis that we would reciprocate likewise in another area where our competitors may need to also use our base station tower.
"At times we have agreed and at times we have not agreed depending on how strategic either party views the infrastructure on offer. This is the approach to infrastructure sharing that we have supported and have ourselves participated in.
"What we have opposed is the compulsory utilisation of our infrastructure by parties who themselves do not have infrastructure that we need to use. That is not infrastructure sharing. That is compulsory acquisition of infrastructure from one person who has chosen to invest in infrastructure for the benefit of another person who chose to invest in other things that are either not available to be shared, or that we do not need," said the telecommunications giant.
Interestingly, Econet argues that it cannot share infrastructure with companies that "chose to deploy their money in large fleets of cars, multi-storey buildings for their executive offices, and various other assets that we have no wish to share in".
Added Econet: "The tone that the current debate on infrastructure sharing has taken appears to be aimed at compelling us to make our infrastructure available for the use of others who chose other priorities.
"We all had an opportunity to develop our infrastructure. We would be betraying the Government of Zimbabwe, and thousands of pensioners and other shareholders who chose to forgo dividend in order for us to develop our infrastructure.
"Therefore the type of infrastructure sharing under debate is not feasible. It is a disguised, unconstitutional form of compulsory acquisition of our infrastructure."
Without giving names, the company claims that other players have been intruding into its base station sites without permission "in preparation for the illegal grab of our base stations".
The company said it is confident Government will "see through this ploy as they have already spoken out about the uneven playing field where only Econet has paid a licence fee of US$137,5 million and our competitors have not".
But Information Communication Technology, Postal and Courier Services Minister Mr Supa Mandiwanzira last week intimated that Econet is having a warped view of what Government intends to achieve.
"Infrastructure sharing is not a concept being invented by the Zimbabwe Government or by Supa Mandiwanzira. It's global best practice and we expect players like Econet to know better.
"But their reaction is not surprising. They are the biggest player in the market and therefore they want to protect and maintain their dominance.
"As it stands, Econet shares infrastructure with foreign networks that have their subscribers roaming in this country. Why should the same not be extended to Zimbabwean citizens who are not subscribers of Econet?
"If an MTN subscriber enjoys infrastructure sharing with Econet, why shouldn't a subscriber of NetOne or Telecel, for instance? As Government, we are not going back on the need to rationalise investments in the telecoms sector.
"We cannot have the duplication and triplication of infrastructure like base stations and fibre optic cable when all players can share and thereby reduce the cost to the consumer. Anyone opposing this direction, especially through the media, without engaging us in Government about their reservations, will find us very uncompromising," said Minister Mandiwanzira.
Telecel, whose agreement to operate has since been withdrawn, said it is willing to negotiate with other companies in order to share infrastructure.
NetOne spokesperson Mr Rutendo Chabururuka had not responded to questions e-mailed to him two weeks ago by the time of going to print.
But the company's managing director, Mr Reward Kangai, has in the past said the mobile phone companies were licensed at different times and have different structural specifications for their infrastructure, making infrastructure sharing difficult.
Econet has in the past been aggressive in defending its turf, a development that has ultimately set it on a collision course with different industry players.
Last year banks clashed with the mobile operator for refusing them access to its USSD platform.
To date, mobile platforms remain non-interoperable.
Interoperability describes the ability of a platform to use the part or system of another platform.
Various mobile value-added services have therefore remained the enclaves of respective mobile operators.
For example, subscribers on EcoCash, the mobile money service of Econet, cannot send money or vice-versa to One Wallet, which is NetOne platform of the same service and Telecash (controlled by Telecel).
Subscribers have, as a result, been inconvenienced.
In 2009, Government think-tank, the National Economic Consultative Forum (NECF), recommended the establishment of an infrastructure sharing framework for the telecommunications sector to boost connectivity and unlock industry opportunities.
At the time, telecommunication companies had realised the need to share both passive and active infrastructure.
As a result, network operators had signed MoUs to share towers in selected areas on a "swap basis".
There were 17 operational sites where towers are being shared between Econet and Telecel.
TelOne and Econet shared both passive and active infrastructure such as transmission capacity.
Powertel and Econet also shared bandwidth on routes such as Harare-Bulawayo, Harare-Mutare, Triangle- Chiredzi, Harare-Beitbridge, and Mutorashanga-Mt Darwin.
Similarly, NRZ was sharing transmission capacity with network operators.
But at the time, the NECF observed that NetOne, which had 204 sites in total, only shared two sites with Econet.
"There is unnecessary duplication of resources among the existing networks. For example, the three mobile networks have separate towers and equipment in Victoria Falls, Ruwa, Mvuma, and ZESA Training Centre (Harare).
"This duplication of network resources increases set-up costs thus hindering speedy network roll-out. Infrastructure sharing is being frustrated by limited co-operation and poor turnaround times among existing operators. Environmental aesthetics is also compromised as a result of the proliferation of towers.
"It is recommended that the regulator should provide a regulatory framework and criteria for infrastructure sharing, actively encouraging sharing or mandate access.
"Any regulatory decision should be made based on an analysis of the competitive impact of infrastructure and in line with good regulatory goals. The regulator should also be non-discriminatory and independent in its policy implementation," said NECF in the report.
Source - sundaymail
